Germany and the Euro

West Germany- Economy (Reunification)

• One of the first steps toward the unification of East Germany and West Germany was the union of the two economies.

• On July 1, 1990, the economies of the ‘two Germanys’ became one.
• It was the first time in history that a capitalist and a socialist economy had suddenly become one.

• West Germany developed a system of high wages and high social benefits that has been carried over into united Germany.

• From 1990 the positive and negative distortions generated by German unification set in.

• Since its creation in 1949, the FRG has played an important role in the world economy. Consistently among the most important trading nations in the world, Germany often derives a higher share of its GDP from exports than any other major state.

• The first decade, (1950s), had been that of the "economic miracle."
• The second decade, (1960s), had seen consolidation and the first signs of trouble.
• The 1970s had brought the oil shocks, the social programs, the deficits, and finally a loss of control.
• In the 1980s, new policies and a more stable environment abroad led to economic recovery.